Diana Avigdor, our head of trading, joins BNN Bloomberg to discuss the violent rotations moving through the tech sector. IBM is down roughly 24 per cent after an earnings miss, with customers shifting software spending toward memory and storage ahead of possible price increases. A decline of that size in a company that large is not about fundamentals alone. We see these moves as overdone, driven by programmatic, price-insensitive trading on volumes about 25 per cent below normal. The rotation runs daily, today out of software and into chips and storage.
On commodities, WTI is back near $80, but the price action is calmer than at the start of hostilities, a sign the market is internalizing headlines. From an inflation standpoint, we would rather see oil at $65 than $100. Gold holds attention at the $4,000 support level, helped by a better than expected US CPI print, lower rate expectations and a softer US dollar. In Canada, we do not expect the Bank of Canada to move rates at tomorrow’s decision, since a hike would offset the growth the economy has only just started to show. Among US banks, we hold JP Morgan, Goldman Sachs, Royal Bank and Citigroup, and we continue to favour Citi as a turnaround story with a 12 per cent dividend increase, a $30 billion buyback and room for return-on-equity growth.